What is the difference between Pensionable and non-pensionable salary?

By Marc Sevitz · Updated

Q: Please explain the tax calculation between pensionable and non-pensionable salary

TaxTim Marc

TaxTim Marc said:
8 April 2022 at 16:05

A: Pensionable earnings would be the income/remuneration used by your Employer to calculate your pension or provident fund contributions, which means that if your company deducts pension from your salary/ remuneration then it is pensionable income. So, for example, your basic salary and perhaps commission earned would be pensionable.

Non-pensionable income/ remuneration is the part of your income that is not subject to a compulsory contribution towards a pension or provident fund, which means that if your Employer does not deduct pension or provident contributions, then your income would be non-pensionable. Other remuneration such as bonuses, overtime, and allowances would be considered non-pensionable because the pension contribution was not calculated on that.